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  • July 2020
  • Article
  • Advances in Strategic Management

Does Corporate Misconduct Affect the Future Compensation of Alumni Managers?

By: Boris Groysberg, Eric Lin and George Serafeim
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Abstract

Using data from a top-five global executive placement firm, the authors explore how an organization's financial misconduct may affect pay for former employees not implicated in wrongdoing. Drawing on stigma theory, they hypothesize that although such alumni did not participate in the financial misconduct and they had left the organization years before the misconduct, these alumni experience a compensation penalty. The stigma effect increases in relation to the job function proximity to the misconduct, recency of the misconduct, and an employee's seniority. Collectively, results suggest that the stigma of financial misconduct could reach alumni employees and need not be confined to executives and directors that oversaw the organization during the misconduct.

Keywords

Corporate Misconduct; Financial Misconduct; Stigma; Crime and Corruption; Employees; Compensation and Benefits

Citation

Groysberg, Boris, Eric Lin, and George Serafeim. "Does Corporate Misconduct Affect the Future Compensation of Alumni Managers?" Special Issue on Employee Inter- and Intra-Firm Mobility. Advances in Strategic Management 41 (July 2020).
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About The Authors

Boris Groysberg

Organizational Behavior
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George Serafeim

Accounting and Management
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    Glass Half-Broken: Shattering the Barriers That Still Hold Women Back at Work

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More from the Authors
  • Societal and environmental issues are pressing and companies must transform if they intend to remain competitive By: Ethan Rouen and Georgios Serafeim
  • Glass Half-Broken: Shattering the Barriers That Still Hold Women Back at Work By: Colleen Ammerman and Boris Groysberg
  • Accounting for Product Impact in the Telecommunications Industry By: George Serafeim and Katie Trinh
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